New World Of Challenge Awaits IRI Attendees

It has only been six months since the Insured Retirement Institute had its Marketing Summit, but attendees are facing a different market environment as they gather for IRI’s annual meeting in Colorado Springs today.

At the marketing summit in March, the Department of Labor had not yet released the final version of its conflict of interest rule. Although variable annuities (VAs) fell under the onerous best interest contract exemption, fixed indexed annuities (FIAs) still resided in the less complicated prohibited transaction exemption (PTE) 84-24.

Companies with a strong VA presence were talking at the meeting about developing FIAs. Even executives from carriers whose names were strongly associated with VAs were talking openly about it.

But in the following month, the DOL surprised the insurance industry by moving FIAs in next to VAs in the best interest contract exemption (BICE) category. In that case, FIA sales with retirement money would require a financial institution’s authorization. The typical FIA distributor, independent marketing organizations, would not be considered financial institutions. And carrier executives have said they were not willing to accept the liability of signing as financial institutions with independent agents that the companies do not control.

That is just one of the many challenges facing company executives as about 350 attendees convene for the annual meeting. Along the lines of the fiduciary standard, many insurance and financial companies see new demands likely to come from the Securities and Exchange Commission and other fiduciary proponents.

Wresting Opportunity From Chaos

The meeting’s theme is "Capitalizing on Chaos," and there plenty to try wresting opportunity out of, according to Andrew Simonelli, IRI vice president of communications.

Although the DOL rule is one of the biggest impacts on the industry in decades, other challenges loom large for insurance and financial companies and sellers, Simonelli said. Some long-standing issues are proving to have some serious legs, such as volatile equities markets and low interest rates, he said. Both of those issues have pressured not only company reserves and profits but also their ability to offer attractive rates on products.

Challenges await on the digital front as well, including robo-advice and simply attracting customer attention online.

Looking nationally, there is a presidential campaign that can be described at least as unsettling. Control of Congress is also a question, and the outcome of the election can affect a majority of the issues faced by companies and distributors.

Lifting the gaze internationally, the Brexit issue also affects companies based or operating in Europe, along with the potential disruption to worldwide markets.

Some of these issues erupted or grew in the six months since the IRI marketing meeting and news seems to be relentlessly grim. But Simonelli said with all the challenges come possibilities. “Most of our speakers will be addressing these issues,” he said. “We are going to be looking for opportunities to not only survive but thrive in this chaos.” 

Steven A. Morelli is editor-in-chief for InsuranceNewsNet. He has more than 25 years of experience as a reporter and editor for newspapers, magazines and insurance periodicals. He was also vice president of communications for an insurance agents’ association. Steve can be reached at [email protected].

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